FTD Companies Inc (FTD): Are Hedge Funds Right About This Stock?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards FTD Companies Inc (NASDAQ:FTD) to find out whether it was one of their high conviction long-term ideas.

FTD Companies Inc (NASDAQ:FTD) shareholders have witnessed an increase in enthusiasm from smart money in recent months. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Caesars Entertainment Corp (NASDAQ:CZR), InvenSense Inc (NYSE:INVN), and Nuveen Performance Plus Municipal Fund (NYSE:NPP) to gather more data points.

According to most market participants, hedge funds are viewed as slow, old financial tools of the past. While there are greater than 8000 funds in operation today, our researchers hone in on the aristocrats of this group, around 700 funds. These money managers command the majority of the smart money’s total capital, and by tracking their unrivaled picks, Insider Monkey has unearthed many investment strategies that have historically outrun the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, let’s check out the recent action surrounding FTD Companies Inc (NASDAQ:FTD).

How are hedge funds trading FTD Companies Inc (NASDAQ:FTD)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, an increase of 25% from one quarter earlier. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Jamie Zimmerman’s Litespeed Management has the number one position in FTD Companies Inc (NASDAQ:FTD), worth close to $52.1 million, amounting to 6.4% of its total 13F portfolio. On Litespeed Management’s heels is James H. Litinsky of JHL Capital Group, with a $28.3 million position; the fund has 3.1% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions comprise Michael Doheny’s Freshford Capital Management, Richard S. Meisenberg’s ACK Asset Management, and Chuck Royce’s Royce & Associates.

With a general bullishness amongst the heavyweights, specific money managers have jumped into FTD Companies Inc (NASDAQ:FTD) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in FTD Companies Inc (NASDAQ:FTD). Balyasny Asset Management had $0.5 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new FTD Companies Inc (NASDAQ:FTD) investors: Mike Vranos’s Ellington, Michael Platt and William Reeves’s BlueCrest Capital Mgmt., and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s now review hedge fund activity in other stocks similar to FTD Companies Inc (NASDAQ:FTD). We will take a look at Caesars Entertainment Corp (NASDAQ:CZR), InvenSense Inc (NYSE:INVN), Nuveen Performance Plus Municipal Fund (NYSE:NPP), and Berkshire Hills Bancorp, Inc. (NYSE:BHLB). All of these stocks’ market caps are similar to FTD Companies Inc (NASDAQ:FTD)’s market cap.

As you can see, these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $90 million. That figure was $123 million in FTD Companies Inc (NASDAQ:FTD)’s case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table. On the other hand, Nuveen Performance Plus Municipal Fund (NYSE:NPP) is the least popular one with only 5 bullish hedge fund positions. FTD Companies Inc (NASDAQ:FTD) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Caesars Entertainment Corp (NASDAQ:CZR) might be a better candidate to consider a long position.